Sam Taylor - How to protect medical innovation

By Sam Taylor

Published: Monday, June 17, 2013 at 9:15 a.m.

Last Modified: Monday, June 17, 2013 at 9:15 a.m.

According to a new report, there are now 907 biopharmaceutical treatments in development, targeting over 100 different conditions. Of those medicines, more than 500 are intended to treat cancer, infectious diseases, and genetic disorders. The vaccines in development total 250.

Our state is home to six percent of the country's biopharmaceutical firms. North Carolinians know firsthand the importance of the right policy environment to foster biomedical innovation. Yet President Obama has proposed two new cost-saving measures that could ultimately hinder innovation and drug development.

The first proposal concerns a category of drugs known as "biologics", which are derived from living organisms. According to the Tufts Center for the Study of Drug Development, it costs $1.3 billion to bring a new biologic to market, a process that can take up to 15 years. To protect their investment, biologic innovators are entitled to a fixed period of data protection. During this time, competitor firms are effectively barred from releasing medicines based on the research data behind a new brand name drug.

To sustain an environment that fosters breakthroughs, it is essential to protect the intellectual property of medical innovators. A broad body of research confirms the necessity of a 12-year period of data protection.

Shortening this period in order to get more drugs on the market sooner has long been an Obama administration priority. Last year, the president proposed lowering data protection to seven years, a proposal the administration has also advanced in the president's new budget and international trade negotiations.

This would be a mistake. As Duke University's Henry Grabowski has written: "Proposed legislation without any provisions for a data exclusivity period or only very nominal periods of exclusivity would have adverse effects for these biological innovation activities … As a consequence, the future introduction of important new medicines could be delayed significantly or deterred altogether."

The second measure the administration is proposing concerns the Medicare Part D prescription drug program. Currently, private health insurers offer competing plans to Part D enrollees. This market mechanism has been containing program expenses and premiums.

Unfortunately, the president has proposed a rebate scheme that would effectively implement price controls on some prescriptions sold under Part D. The President would like to mandate "rebates" – paid to the government – for all medicines sold to low-income beneficiaries.

But according to the nonpartisan Congressional Budget Office, price controls in the Part D program could "reduce manufacturers' incentives to invest in R&D on products that would be expected to have significant Medicare sales." Potential breakthrough discoveries to treat Parkinson's, arthritis, osteoporosis, and other diseases that disproportionately affect the elderly could be forgone.

And like shortening the data protection period, altering Part D could restrict resources for investment in the research and development necessary to bring new biopharmaceuticals to market.

The president's proposals could stifle medical innovation, both here in North Carolina and all across the country.

Sam Taylor is president of NCBio, the trade association and lobbying organization.

<p>According to a new report, there are now 907 biopharmaceutical treatments in development, targeting over 100 different conditions. Of those medicines, more than 500 are intended to treat cancer, infectious diseases, and genetic disorders. The vaccines in development total 250.</p><p>Our state is home to six percent of the country's biopharmaceutical firms. North Carolinians know firsthand the importance of the right policy environment to foster biomedical innovation. Yet President Obama has proposed two new cost-saving measures that could ultimately hinder innovation and drug development. </p><p>The first proposal concerns a category of drugs known as "biologics", which are derived from living organisms. According to the Tufts Center for the Study of Drug Development, it costs $1.3 billion to bring a new biologic to market, a process that can take up to 15 years. To protect their investment, biologic innovators are entitled to a fixed period of data protection. During this time, competitor firms are effectively barred from releasing medicines based on the research data behind a new brand name drug.</p><p>To sustain an environment that fosters breakthroughs, it is essential to protect the intellectual property of medical innovators. A broad body of research confirms the necessity of a 12-year period of data protection.</p><p>Shortening this period in order to get more drugs on the market sooner has long been an Obama administration priority. Last year, the president proposed lowering data protection to seven years, a proposal the administration has also advanced in the president's new budget and international trade negotiations.</p><p>This would be a mistake. As Duke University's Henry Grabowski has written: "Proposed legislation without any provisions for a data exclusivity period or only very nominal periods of exclusivity would have adverse effects for these biological innovation activities … As a consequence, the future introduction of important new medicines could be delayed significantly or deterred altogether."</p><p>The second measure the administration is proposing concerns the Medicare Part D prescription drug program. Currently, private health insurers offer competing plans to Part D enrollees. This market mechanism has been containing program expenses and premiums. </p><p>Unfortunately, the president has proposed a rebate scheme that would effectively implement price controls on some prescriptions sold under Part D. The President would like to mandate "rebates" – paid to the government – for all medicines sold to low-income beneficiaries. </p><p>But according to the nonpartisan Congressional Budget Office, price controls in the Part D program could "reduce manufacturers' incentives to invest in R&D on products that would be expected to have significant Medicare sales." Potential breakthrough discoveries to treat Parkinson's, arthritis, osteoporosis, and other diseases that disproportionately affect the elderly could be forgone.</p><p>And like shortening the data protection period, altering Part D could restrict resources for investment in the research and development necessary to bring new biopharmaceuticals to market. </p><p>The president's proposals could stifle medical innovation, both here in North Carolina and all across the country. </p><p>Sam Taylor is president of NCBio, the trade association and lobbying organization.</p>